Re: TSP rollover at retirement and collecting interest from bonds?
You can, and probably should, roll your TSP holdings into a self-directed retirement IRA upon leaving gubmint service. There will be no tax issues with that if done correctly.
If you move your TSP assets to a non-retirement account you will pay full income tax on the amount taken out of TSP. It will be treated as earned income. Additionally, if you are less than 59 1/2 you will get a little more love from the IRS in the manner of an early withdraw penalty. Yea!!!
Now, let us assume you moved your TSP assets properly to your self-managed IRA account. The money you take out will be taxed at income tax rates. Nothing to do with the type of assets you hold. Uncle Sam wants their money. One nice thing is that the investments in your IRA are not taxed until you pull them out. The compounding earnings are untaxed till you purchase your ski boat.
Lookin' up at the 'G Fund'!!!
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